1

1869288
The Executive Summary
The licence for which this report is prepared (ACME Emeralds Limited) is
located at plot number 426 in Lufwanyama Emerald Restricted Mining Area.
The site is about 45km SW of Kitwe Town.
The project under consideration involves open pit mining of gemstones,
transportation of overburden material to the overburden dump, dewatering
the open pit, servicing of equipment, hand picking of gemstones if seen in the
pit and transportation of the gemstone ore to the washing/sorting plant.
Support facilities include a mine camp for 50 workers, security fence,
explosives magazine, settling pond for dewatering water, hired earth moving
machines, water bowser, fuel tank, service workshop, borehole and an
administration office.













2


Contents
1.0 INTRODUCTION ................................................................................................................................. 3
2.0 LOCATION AND ACCESS .................................................................................................................... 3
3.0 REGIONAL GEOLOGICAL SETTING AND EMERALD MINERALISATION ............................................... 4
3.1 GEOLOGY OF PLOT 426 ..................................................................................................................... 6
3.2 EMERALD MINERALIZATION ............................................................................................................. 6
3.3 MINEABLE RESERVES ........................................................................................................................ 8
4.0 DESCRIPTION OF THE PROJECT ....................................................................................................... 12
4.1 OPEN PIT MINING PROCESS AND MINING MACHINERY ................................................................. 13
5.0 EMERALD EXTRACTION ................................................................................................................... 15
6.0 ECONOMIC EVALUATION ............................................................................................................... 16
7.0 CAPITAL AND OPERATING COSTS .................................................................................................. 17
8.0 INVESTMENT WORTH ..................................................................................................................... 17
8.2 COST BENEFIT RATIO ....................................................................................................................... 22
9.0 EMERALD PRICING ............................................................................. Error! Bookmark not defined.
10.0 PROPOSAL FOR EMPLOYMENT AND TRAINING OF CITIZENS OF ZAMBIA .................................... 23
11.0 PROPOSAL FOR PROMOTION OF LOCAL BUSINESS DEVELOPMENT............................................. 23
REFERENCES .......................................................................................................................................... 24





3


1.0 INTRODUCTION
The purpose for this report is to outline a business plan for ACME Emeralds
Limited, P.O Box 36380, Lusaka, the holder of Gemstone Licence Number
............HQ SGL.
2.0 LOCATION AND ACCESS
Plot 426, which lies within Chief Lumpumas domain is centred at 13
0
05 20 S
and 27
0
59 27 E coordinates, South-West of the Copper belt town of Kitwe
and north-west of Luanshya town within an area designated as the Ndola Rural
Emerald Area. The project area lies on the licensed area covering
approximately 100 hectares. The licence area is situated in Mitondo west in
the Plantation area.


Figure 1: Location map

4



Figure 2: Provincial map showing Lufwanyama District were the licence is.

3.0 REGIONAL GEOLOGICAL SETTING AND EMERALD MINERALISATION
Stratigraphic setting
The Mitondo emerald fields occur in rocks belonging to the Muva super group.
The Muva super group comprises meta-sediments intercalated with ultra basic
rocks.
The Muva rocks overlie older granites and gneisses of the basement complex;
they are covered by younger meta-sediments of the Katanga super-group.

Rocks belonging to the Muva super-group are exposed in the central part of
the Mitondo area. This unit comprises quartzites and quartzose schists near
5

the base and overlying quartz-mica schists intercalated with talc-chlorite
tremolite-magnetite schists. The quartzites are medium to coarse grained and
are composed almost entirely of quartz, with accessory iron oxides, Muscovite,
rutile and schorl. Banding of probable tectonic origin is seen, whilst in places
relicts of sedimentary structures (e.g. Cross-bedding) may be observed. Quartz-
mica schists are fine-grained rocks composed of quartz, muscovite and locally
sericite. Biotite, tourmaline, amphibole (tremolite) and magnetite occur as
accessories. Close to the contacts with talc-magnetite schists the rock carries
some talc, chlorite and a considerable amount of biotite.
Talc-chlorite-tremolite-magnetite schists seem to constitute a single horizon
placed relatively low in the Muva sequence, either immediately above or near
to the quartzites. The horizon is poorly exposed on the surface.
The main components of the ultra-mafic schist are talc, green or colourless
chlorite often forming felted intergrowths, and tremolite/ actinolite as
scattered needles. Magnetite forms about 5% of the rock, but locally reaches
15%. The magnetite contains chromium substituting for iron, while nickel is
accommodated in the sheet silicates. Locally the schist is transitional to
amphibolite schist containing inter-locking crystals of tremolite-actinolite, with
some talc and chlorite. In places talc and chlorite replace the amphiboles. The
schists are believed to have been derived from ultrabasic rocks in the form of
Lava flows or sills and act as a host for emerald mineralization.
Younger Katangan supergroup rocks cover most of the area. They are
composed of argillites, quartzites, dolomites and carbonaceous shales. The
unit is intruded in places by gabbro and metagabbro intrusions consisting of
olivine, plagioclase and augite in unaltered rocks and of hornblende with
6

scapolite in altered varieties. Pegmatites are widely spread within the Muva
rocks. See fig 2 geological map.
3.1 GEOLOGY OF PLOT 426
The geology of the plot consists of Muva Super Group rocks. These comprise
quartzites and schists. The schists consist of mica schists and talc magnetite
schists.
Emerald mineralization is associated with talc magnetite schist, which is
intruded by pegmatite and quartz tourmaline veins.
3.2 EMERALD MINERALIZATION
The basic regional geological controls of emerald mineralization in the Mitondo
area have been established to be the presence of metamorphosed mafic
magmatic rock units and pegmatites, (Hickman, 1972), Sliwa and Nguluwe
1984). Emerald mineralization occurs in the contact zone between the meta-
basic units and the pegmatites. In these zones, hydrothermal alteration due to
pegmatite intrusion has produced biotite-phlogopite schists, which host
emerald-tourmaline mineralization. Mineralisation is however not only
confined to these alteration zones but may also occur both within the
pegmatites (Sliwa and Nguluwe, 1984) and in less altered mafic rocks. It is
apparent that not all alteration zones contain emerald mineralization. This is
mainly attributed to differences in compositions of the pegmatitic fluids (Sliwa
and Nguluwe, 1984). So far, no quantitative work has been done on the
compositions of these fluids and their temperatures.
Sliwa and Nguluwe (1984) recognized three phases of pegmatite injections.
The oldest phase comprises tourmaline bearing granitic pegmatites which
consist of feldspar + quartz + muscovite + tourmaline. The second phase
consists of quartz tourmalines, which will be texturally zoned being fine
grained at the margins and coarse-grained in the centre. The third and last
phase is a coarse-grained quartz tourmaline pegmatite. According to Sliwa and
Nguluwe (1984), the first two phases will be always discordant to the host
rocks whilst the third phase occurs as both concordant and discordant veins.
On this basis, the first two phases were considered to be feeders to the third
7

phase. Emerald mineralization appears to be associated with this last phase of
pegmatite injection (Sliwa and Nguluwe, 1984).
All the pegmatites intrusions will be considered to be structurally controlled
although the nature and type of the structures will be not described (Sliwa and
Nguluwe). The talc-chlorite-amphibole magnetite schist, into which the
tourmaline pegmatites will be intrusive, occurs at various stratigraphic levels
inter-banded with quartzites and quartz muscovite-biotite schist (Hickman,
1972). Due to lack of more detailed geological work, it is however not known
whether the stratigraphic repetition is due to recumbent folding of one single
talc-chlorite magnetite schist unit or there exists more than one layer.
Hickman (1972) noted the local transition of schist into amphibolites and
partial transformation of amphibole to talc and chlorite. Although not
described in detail, the observations made by Hickman (1972) suggest a meta-
somatic alteration of amphibolite to talc-chlorite schist. Hickman (1972)
suggested that the schist was derived from an ultra-mafic rock.

Figure 3: Geological map
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3.3 MINEABLE RESERVES
It is estimated that the mineable reserves can last up to a period of twenty
years. Additional reserves may be established after further exploration to
increase the life span.


Legend





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4.0 MARKET ANALYSIS
4.1 Product
Emerald is part of the beryl family being a silicate crystal composed primarily of
silicon and oxygen. It is a hexagonal crystal having a hardness of 7
2
. The presence of
either chromium or vanadium is responsible for the green color. Stones containing
vanadium have a bluish tint, those with chromium exhibit the "emerald green".
Zambian emerald coloration tends towards the deeper greens. The Geological
Report for Nachingwali shows that the mineralization on the site has high chromium
content. The few emeralds found in the core samples show very good color.
Colombian emeralds tend to have a clear core with the color concentrated along the
edges of the crystal. Zambian crystals have color running throughout the core.
The best-known source of emerald in the world for the past 400 years or so has been
Colombia. The same mines that drew the conquistadores into the jungles are still
producing more emerald by value than anywhere else. The famous trio of Colombian
mines, Muzo, Coscuez, and Chivor, were joined in the late 1990s by La Pita. Supply
overall, however, has been gradually decreasing in quantity and quality due to the
depth of the mines; the best Colombian emeralds to be found today, as one dealer
joked, can be mined from the wrecks of the Spanish galleons in the Caribbean Sea.
Exploration, for other mining has been hampered by the unstable political and social
conditions in Colombia.
The world's other leading source of emerald is Brazil.
The discovery of high-quality emeralds in Itabira in the
state of Minas Gerais in the 1970s and the nearby Nova
Era in the 1980s boosted Brazil to the status of
international player in the emerald market. Today,
production of emerald from Brazil is steady as miners
gradually transition from the traditional garimpeiro (independent prospector) model
of mining to mechanized operations funded by private owners or long-term
investors.
A third major source of emerald is Zambia. Most Zambian emerald is bought by the
cutters of Israel, and the country continues to produce a steady supply, though not
as much as either Colombia or Brazil.
Another famous African deposit was discovered in Sandawana, Zimbabwe, in the
1950s. The mines were known for their deeply saturated emerald, which produced
beautiful colors even in small sizes. The deposit passed through a number of hands,
including mining conglomerate Rio Tinto; at last report, a local company had gotten
the mines up and running, although it contributes very little to the overall world
emerald market.

Colombian emerald, photo John Parrish.
10

None of the other world sources of emerald produce large quantities, though there
is usually a limited amount coming out. Afghanistan is the source of some very
beautiful emerald, although supply is hampered by the political situation there and
the difficulty in traveling in and out of the country. The United States' military
overthrow of the Taliban, the fundamentalist Islamic government that took over the
country by force in 1996, has not improved the situation. The neighbouring country
Pakistan occasionally produces emerald; while beautiful, the crystals tend to be
small.
Emerald has also been mined in Russia, India, the United States (North Carolina),
Australia, South Africa, Tanzania, Mozambique, and the Yukon region of Canada.
Source: http://www.tucsonshowguide.com/stories/sep04/roughissue2.cfm#eme
Virtually all emeralds have inclusions, natural fractures and stress fissures within the
stone. While this is unacceptable in most gemstones, it is part of the nature of
emeralds and is to be expected. Emeralds have been treated for centuries with oils
to minimize the effect of these inclusions. Statistics show that 99% of all emerald
gems are treated or "oiled" to reduce the optical refraction of the inclusions.

Colombian emeralds still dominate the upper end of the market, while the African
stones take the middle and lower market segments. But more high grade Zambian
emeralds are finding their way to upper markets.

4.2 Demand
Colombian emeralds still dominate the upper end of the market, while the African
stones take the middle and lower market segments. But more high grade Zambian
emeralds are finding their way to upper markets.

Zambian stones, however, are typically "cleaner" than Colombian or Brazilian stones
having fewer inclusions and are rarely treated with fillers. This is appealing to many
retailers who prefer the purity of the crystal radiating through the stone.

4.3 Pricing
Price is another attraction of Zambian stones. Emerald is twenty times more rare
than diamond but sells at about the same price per carat. In extra fine qualities,
Colombian emeralds with no sign of treatment can reach highs of $20,000 per carat
wholesale in sizes over 5 carats. Zambian stones of equal quality typically would be
in the $10,000 per carat range. The vast majority of emeralds however, are less than
two or three carats. A one carat Colombian gem would bring between $1,000 to
$4,000 per carat, while the Zambian would bring something between $300 and
$1,200. Zambian stones typically sell at about a 25% discount to Colombian, though
this disparity is shrinking as more dealers and collectors are moving to the cleaner
Zambian emeralds.



11

The following table shows a range of retail price that could be typical for one (1) carat of
emerald. Emeralds are one of the most rare and valuable of all gemstones.

Grade Weight Minimum Maximum
Price/carat ($) Price/carat ($)
AA (Extra Fine) 1carat (0.2g) 2900 9800
A (Fine) 1carat (0.2g) 1125 2900
B (good) 1carat (0.2g) 525 1125
C (Commercial) 1carat (0.2g) 30 525
*2-3% emerald of which one third is really high quality
*5-8% low grade emerald saleable of good color.
*10-15% beryl (below minimum green and chrome standard) saleable.
*75-80% rejects (saleable as beryl ore) beading material.
The sizes of the emerald pieces also determine the pricing. Big pieces of good quality
emeralds will attract very high prices as compared to small pieces of the same quality. A
good combination of colour, cut, clarity and crystal will make any piece of this gem valuable.
4.4 Marketing and Distribution
4.4.1 Local Competition:
There are a little more than 400 mining plots in the restricted area. The vast
majority are not being actively worked. Approximately twenty to thirty are
being worked but most are severely undercapitalized.

Following the elections in 2001 pressure has been placed on the Ministry of
Mines to enforce existing laws and we have seen a dramatic increase of activity
from the ministry and the Department of Mine Safety. Many artisan miners are
scrambling for cash to produce the required environmental impact studies, to
establish safe procedures and conditions at the mining operations and to
conform to regulatory maintenance standards.

These additional burdens and costs may drive the smaller operations from the
market, thereby limiting competition. The bigger players will likely pick up their
plots and licenses.
12

In the Emerald Restricted Area seven of 23 mines are operational. The largest,
Kamakanga, (a private company), and Kagem, (a semi - privatized entity
operated by a Indian - Israeli consortium and the Zambian Government), are
said to produce approximately 60 to 65% of Zambia's emerald exports. The
total value as estimated by the Ministry of Mines is placed at 500 million USD
annually. The actual numbers are certainly higher as more than half of the
rough emerald is smuggled out of the country. The Ministry of mines has been
reluctant to release the production numbers of individual mines so solid
figures are difficult to determine at best.
The world wide rough emerald market by extrapolation is similarly difficult to
estimate. The finished gemstone numbers elsewhere in this paper provide the
most reliable estimate of world demand for colored gemstones. The value of
finished stones is much higher than the rough, but the finished stones by
weight are only 20 to 25% of the rough from which they are cut.

4.4.2 World Competition:
Since emerald is a world commodity of sorts, local competition is not as
significant as it is for many businesses. All producers are selling into a world
market. Emeralds are produced in several parts of the world.

The number one producer in the world is Colombia. Colombian stones enjoy
the reputation as the world standard by which all other emerald is judged.
There are some 150 known emerald mining sites in Colombia. Three major
mines produce the majority of Colombian emerald exports. The best know are
Muzo and Chivor, know to have been mined off and on since the time of the
Incas. Coscuez mine however is the largest Colombian producer, drawing from
some sixty mining locations. Colombia is the largest supplier of emerald
gemstones to the US.



5.0 DESCRIPTION OF THE PROJECT
It is important to emphasize that the project is not complex and the only major
activities are open pit mining, dewatering and removal of overburden/ waste
rock. The sub-sections below briefly describe the major activities of the
project. The simplicity of the project compared with large scale copper mines
on the Copper-belt is indicative of minimal environmental aspects and
subsequently the nature of environmental impacts.
The schedule of activities will be similar to any other mining ventures, starting
with mining which will include ripping of overburden, blasting of virgin rock
and the ore body (vein) and dumping of the overburden. There after ore
crushing and washing shall follow. During washing the sorting is done and
finally storage of ore and disposal of slimes from the washing plant.
13

Other scheduled activities are domestic waste and sewage management, pit
dewatering, domestic water supply, fuel storage, construction of fuel storage
facilities, access roads, housing units, security facility, mechanical and metal
fabrication workshop, salvage yard, magazine, wash bay, oil and water
separator etc.
Decommissioning and closure of all these (above mentioned) activities is also
part of the schedule.
A life time of 10 years will be the total time in which all these activities will be
implemented, starting with infrastructure that requires construction, followed
by routine activities which are cyclic and ending with decommissioning and
closure activities.
5.1 OPEN PIT MINING PROCESS AND MINING MACHINERY
Mining activities will be done using open pit mining methods. Major activities
will include removal of overburden material, de-watering activities, defining
the pit benches to comply with standard open pit mining methods and
generation of waste rock and overburden material.

The open pit to be developed will have a length of 100m, width of 80m and
depth of 50m. The pit sections will have benches with maximum height of 8m,
bench width of 3m and 45
o
as an angle of inclination.
In gemstone mining, about 99% of the mined out material is waste and only
about 1% is the raw material from which gemstones may be extracted. To get
to the vein, the pit will be designed in such a way that it will be wide on the
surface and it will be narrowing as it gets deep thereby making a triangular
cross-sectional shape. Based on these factors, the stripped out material is
estimated at 1.6 million cubic meters as shown below.
Current pit foot print (circumference) = 6.48 hectares (64,800m
2
)
Current depth = 50 meters
Mined out volume = (64800 x 50)/2
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= 1,620,000 m
3

Note: considering the triangular cross-sectional shape, the calculated stripped
out volume is divided by half therefore, the stripped out material will be
approximately 1,620,000m
3
. All this material will be considered as waste
material as long as the vein is not yet accessed.
In the same way, the final volume of the material that shall be mined out is
estimated at 2.9 million cubic meters. This is estimated as shown below.
Projected footprint area = 8.48 hectares (84,800 M
2
)
Projected depth = 70m
Total volume to be stripped = (84,800 x 70)/2
= 2,968,000m
3

About 1% of the total volume mined out is considered as raw material from
which gemstones may be extracted. Therefore, the total waste less the ore is
2,968,000 less (0.01 x 2,968,000) which give about 2,938,320m
3
of mining
waste. This waste shall be dumped at the Overburden Dump and later after
accessing the vein; the waste material that shall be generated shall be used for
back filling the pit.
Storm water cut-off drains shall be constructed around the pit rim to avoid
storm water flowing into the pit. To permit safe mining, in-pit water pumping
will be done and vertical dewatering wells shall also be sunk for dewatering
purposes.
To remove all the waste material from the pit, the overburden material will be
stripped from the pit by excavation, controlled blasting will be used for the
next level after the overburden which is a rock but highly weathered and the
bottom competent layer will be blasted using bulk explosives. These explosives
will be stored on site and shall be used in accordance with procedures and the
licence issued by Mine Safety Department (MSD).
Haulage of the material will be done using 35ton dump trucks and a single
Ramp connecting the surface and the pit bottom will be used.
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6.0 EMERALD EXTRACTION
1) Emerald bearing ore is carefully extracted in the in the mine by Chisel
men, working with Hammer and Chisel.
2) All biotite- cover rock is treated in a washing plant and emerald-
bearing ore particles are picked on a belt or a sorting table.
3) In the emerald room at the mine as much matrix as possible is
separated and the recovered emerald is locked in the strong room.
4) Cobbing:
*Soaking in hot water 2-24 hours
*Remove as much unwanted material as possible, but not 100 percent, by
splitting larger pieces under a hydraulic press, followed by working with
pincers/pliers (not hammer and anvil).
*Prepare stones by opening-up, using existing cracks etc.
5) Knocking-prepare clean emerald particles, uniform in respect of colour,
freedom from inclusions together with partial grading using pincers/pliers.
Fibre optic light being stronger than sunlight and exactly focused on the
stone. Adhering narrow rims of quartztourmaline and biotite are
removed by grinding wheel with a flexible shaft or with a steel file.
6) Sorting, grading, preparation for the market;
Oiling
- Soak in warm water with house hold detergent, half an hour
- Soak 2-3 times in fresh water (may be cold).
- Dry in sun light or infrared lamp.
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- Submerge in oil (same refractive index as emerald, e.g. baby oil) a little
warmer than room temperature, 3-4 hours.
- Put stone on tissue paper, wrap it, and wipe to remove outside oil.
Grading (after oiling)
Small parcels (100g) may be mixed, LARGER are treated as follows;
-Size grading (sieves, weighing of bigger stones)
-colour grading bluish green-pure green (=best colour)
-grading according to quality (clarity, presence of inclusions).
7.0 ECONOMIC EVALUATION
Detailed data are available from the deposits in Ndola Rural Zambia. 250-
500g/m
2
(vein area) emerald run-of-mine (ROM) are extractable, at a
recovery rate of 85-90%. Of this, 65-80% is extracted by chisel men in the
mine, the balance in a washing plant.
The stones are not evenly distributed, but concentrated in pockets on 8-15%
of the total vein or contact stone area. In the pockets which occur on footwall
and hanging wall of the tourmaline vein, either side, concentrations of ROM
emerald of 1500-2000g/t are found (at 3-4t/m
2
vein area).
This Run of Mine (ROM) emerald will yield after preparing and sorting;
*2-3% emerald of which one third is really high quality
*5-8% low grade emerald saleable of good color.
*10-15% beryl (below minimum green and chrome standard) saleable.
*75-80% rejects (saleable as beryl ore) Beading material.
The economic evaluation will only be confined to three grades; gem quality,
cabochon and ornamental (beading material).
17

The sizes of emerald crystals in the biotite rock matrix are between
microscopic and about 20mm x 50mm (hexagonal crystals). Sizes are
distributed log-normal.
8.0 CAPITAL AND OPERATING COSTS
The costs comprise:-
(a) Cost of equipment delivered to site.
(b) Mining cost (per month)
(c) Direct Productions Cost (per month)
(d) Administration Cost (per month)
[The costs per month are calculated assuming that mining will be done for
10 Months/Year]
These costs will be issued for cost of mining operations. The mining
method to be applied at ACME Emeralds Limited will be Open Cast mining.
The limit of open pit will be reached when the additional incremented
bank cubic metres (volume of rock/soil insitu to be mined) or tones of
emerald bearing ore will be costing more.


TRANSPORTATION (AIRFREIGHT)
Assumed mass (2 000kg) @ $1.50/kg $ 3 000
TOTAL $67 750



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EQUIPMENT
Item Quantity Unit cost US $ Total cost
Land cruiser 2 10,000 20,000
Tractor and trailer 2 50,000 100,000
Excavator 4 55,000 220,000
Dump truck 5 25,000 125,000
Prefab units/ sheds 8 4,000 32,000
D9 Bulldozer 2 RENT 20,000 40,000
Jack hammer 6 4,000 24,000
Water pump 4 8,000 32,000
Compressor 2 12,000 24,000
Solar Panel 4 2,000 8,000
Strong Room/
Warehouse
2 10,000 20,000
Fuel tank 10,000
litres
2 4,000 8,000
Motorola Radios 6 200 1200
MAJOR EQUIPMENT SUBTOTAL 6,54,200 $
Shovels 100
Chisels 200
Wheelbarrows 50
Pick 50
Chains 20
Ladders 5
Hard hats 60
Overalls 60
Boots 60
Torch 60
Horse pipes 2 by 100m
Safety goggles 60
Leather gloves 60
Washing plant 1
Screens 5
MINOR EQUIPMENT SUBTOTAL 12,000 $
Equipment Total 666,200 $

COST OF MINING EMERALDS
Workforce
POSITION NUMBER SALARY
USD/
MONTH
Total Nationality
Mine Manager 2 1500 3000 Indian
Mine Engineer 2 2000 4000 Indian
Geologist 1 2000 2000 Zambian
Foreman 4 700 2800 Indian and Zambian
Drivers for cars and
dump trucks
8 300 2400 Zambian
Excavator Operator 4 XXX Zambian
19

Front End loader
Operator
2 XXX Zambian
Watchmen 18 900 Zambian
Labour 90 200 Zambian
Total


DIRECT PRODUCTION EXPENSES
Expenses Cost in USD/ Month
Fuel, oil and lubricants 600,0000
Freight & customs
Purchase of new spareparts/Overheads
Field camp general cost 354,000
Sub-Total


ADMINISTRATIVE EXPENSES
Expenses Cost in USD/ Month
Travel and Visa 900
Office administration, accommodation,
consumables and utility bills
2700
Accountancy fees 1000
Postage and telephone 1000
Printing and stationery 100
Legal fees 100
Medical expenses 200
Motor vehicle expenses 300
20

Sub-Total 6300 $
Total Monthly Cost

9.0 INVESTMENT WORTH
The company will spend $4,000,000 on equipment and $3,000,000 per
annum as operating cost.
The project is evaluated using various numerical criteria. The Net Present
Value (NPV) criterion is considered the standard measure of investment,
however, other criteria such as Internal rate of Return and Solomons
Average Rate of Return (ARR) can also be used. It is assumed that (Park and
Sharp-Bette, 1990, P. 201):-
The cost of capital (MARR or minimum attractive rate of return or
simply, the interest rate or discount rate) is known;
The market is perfectly stable in USA dollar terms; and
The outcome of investment is completely certain.
NPV Notations:-
N : Project life
b
n
: Revenue at end of period n; b
n
O
I : Opportunity interest rate (MARR)
PV
R
: Present value of cash receipts
C
n
: expense at end of period n; b
n
O
PV
E
: Present value of cash expenses
F
n
: Net cash flow at end of period n=b
n
c
n

21

F
n
> O : Net cash inflow
F
n
< O : Net cash outflow
NPV = PV
R
PV
E

NPV = Summation from n=o to N (Fn/(1+i)
n
)
M = F
n
/(1+i)
n

Reject / accept criteria:
NPV > O accept project
NPV = O remain indifferent
NPV < O reject project
10.1 CASH FLOW

END OF PERIOD n (YEARS)
Cash flow 0 1 2 3 4 5
Receipt b
n
0 14,412,000 14,412,000 14,412,000 14,412,000 14,412,000
Expenses C
n
4,000,000 +
3,000,000

3,000,000

3,000,000

3,000,000

3,000,000

3,000,000
Net flow F
n
7,000,000 11,412,000 11,412,000 11,412,000 11,412,000 11,412,000
M 7,000,000 10,374,545 9,431,405 8,574,004.5 7,794,549.6 7,085,954.1

Assume MARR is 10%. Substituting F
n
values into the equation for NPV we get:-
NPV = 43,260,459 7,000,000
= USD $ 36,260,459.00
==========
22

This is positive hence, the project can be accepted.
10.2 COST BENEFIT RATIO
The benefit cost ratio (Eckstein B/C) RA (Eckstein, 1998; Park and sharp-
Bette, 1990, P226) is defined as:-
R
A
= Present value of cash in- flows (B) present value of cash outflows (C)
R
A
> 1 accept project
B = 14,412,000 (1.1)
-1
+ 14,412,000 (1.1)
-2
+ 1442,000 (1.1)
-3
+ 14,412,000 (1.1)
-
4
+ 14, 412,000 (1.1)
-5

= 13,101.818 + 11,910,744 + 10, 827, 949 + 9,843,589.9 + 8,948, 718.1
= 54,632,819
========

C = 7,000,000 (1.1)
0
+ 3,000,000 (1.1)
-1
+ 3,000,000 (1.1)
-2
+ 3,000,000 (1.1)
-3
+
3,000,000 (1.1)
-4
+ 3,000,000 (1.1)
-5

= 7,000,000 + 2,727,272.7 + 2,479,338.8 + 2,253,944.4 + 2,049,040 + 1,862,764
= 18,372,360
R
A
= B/C = 54,632,819 = 2.974
18,372,360
R
A
is greater than 1, hence the project can be accepted.
NOTE: PV = B-C
PV = 54,632,819 18,372,360
23

= 36,260,459.00 USD
=========

11.0 PROPOSAL FOR EMPLOYMENT AND TRAINING OF CITIZENS OF ZAMBIA
The company intends to employ about hundred and fifty (150) workers. It is
the core business of strategy of ACME Emeralds Limited always to have a good
relationship with the local society in which business is carried out. We believe
that this is beneficial not only for the society as such but also for the company
in the longer perspective.
Apart from contributing directly to the society by the provision of reasonable
resources to local development the employment and training strategy is also a
very important aspect. The following areas of particular interest have been
identified for the employment and training of citizens of Zambia:
Local labour will be employed to the largest extent possible. All
employees will be given proper training for their jobs and all labour
regulations will be obeyed with as a matter of corporate standards.
ACME Emeralds Limited will seek to employ Zambian citizens for key
positions to the extent that is possible. Where external expertise is
needed he will instead seek to have at least one Zambian employee
working closely together with this expert with the objective of acquiring
as much knowledge as possible and gradually getting bigger
responsibilities.
12.0 PROPOSAL FOR PROMOTION OF LOCAL BUSINESS DEVELOPMENT
Apart from contributing directly to the society by the provision of reasonable
resources to local development the promotion of local businesses is also a key
24

aspect. The following areas of particular interest have been identified for the
promotion of local business development:
Local business should be engaged to the largest degree possible when
sourcing food, building material and services.
ACME Emeralds Limited shall seek to cooperate with the local headmen
in order to identify areas where local business can provide valuable
services to the project.
ACME Emeralds Limited shall actively work together with the local
businessmen trying to identify areas where they can assist the mining
project.
ACME Emeralds Limited shall at any time endeavour not to interfere
with the operations of the local businessmen.
ACME Emeralds Limited shall seek to identify areas where it can be of
assistance to the local businessmen also outside of the prospecting
program, such as the provision of the improved infrastructure, business
contacts etc.



REFERENCES
1. Mines and Minerals (Environmental) Regulations of 2008.
2. Environmental Protection and Pollution Control Act No. 12 of 1990.
3. Public Health Act, Chapter 295.
4. Mining Environmental Management, January, 1999.
5. Prospect, Placer Dome Inc., December 1998.
25

6. UNEP, 1985.
7. SADC gemstone Handbook
8. Hickman A.C.J (1973) :The geology of Luanshya Area
9. Tembo. F. , Katongo. C, Kambani. S, Simasiku.S (2000) :Geology and
Structural Controls on Quality and Quantity of Emerald Mineralisation in
Ndola Rural Area
10. Sliwa A.S. and Ngulube C.A (1984) :Geological setting of Zambian Emerald
Deposits.
11. Joint Project Geological Survey and Czech Republic
12. Njamu. F.M and Sakungo. F in press. Geolgical Map of the Kafubu Emerald
area. Unpublished
13. D.K. Lombe, R.N. Ndhlovu (2001 Jul) Unpublished:Geophysical and
Geological Survey Report Plot 21E Ndola Rural Emerald Area
14. D.K. Lombe, R.N. Ndhlovu (2001 Dec) Unpublished :Geophysical and
Geological Survey Report Plot 23B Ndola Rural Emerald Area
1 cubic metre 6.4 gms